The Wrong War at the Wrong Time

During the run up to the Iraq war, liberals used to complain that President Bush was attacking the wrong enemy. “Iraq did not attack us on 9/11.” In reply, President Bush offered a complicated argument about how fighting in Iraq would contribute to American security.

If the US had scored a cheap and easy success in Iraq, Americans would probably have accepted Bush’s indirect approach. When things got tough, however, the president’s support corroded–and then collapsed. Angry Democrats accused the president of outright deception: “Bush lied, people died.”

The big idea advanced by market-oriented economists is to suspend the payroll tax. That measure would put immediate cash, up to $127 per week, into hands of every single American worker.

Barack Obama however seems to have decided to learn from Bush rather than repudiate him. His stimulus package does for the economy what Bush was (unfairly) accused of doing after 9/11: uses the crisis of the moment to redirect the nation toward a solution that Obama and his supporters had in mind all along.

The crisis is the collapse in credit markets, the loss of consumer wealth, and the threat of an accelerating deflation. The answer agreed by most economists is a large and immediate fiscal stimulus: use the federal government’s borrowing power to get the country spending again–and fast.

The big idea advanced by market-oriented economists is to suspend the payroll tax. That measure would put immediate cash, up to $127 per week, into hands of every single American worker. It would deliver an additional subsidy of up to $127 per week per employee to every employer.

A payroll tax holiday is not a one-stop magic solution to the nation’s problems. It could be joined to other measures, including the more sensible ideas in the Democratic bill: federal aid to state unemployment plans for example and other measures to put money fast into the hands of consumers.

But Democratic proposals for big government construction projects and other forms of direct government spending are completely irrelevant to today’s problem.

I’m not saying that public investment is inherently and necessarily bad. We’re glad to have the Interstate Highway system and the St. Lawrence Seaway and O’Hare Airport and the Internet.

What I am saying is that good public investment is always slow.

If Democrats have high-return investments to propose–well let them go through the process of proposing and justifying them. But to offer a huge spending program for the years from 2011 through 2014 as a response to a crisis in 2009 . . . well, I’d call that an attack on the wrong enemy.

David Frum is a resident fellow at AEI.

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